Our unique Code of Practice is widely recognised as the gold standard in corporate governance. Its aim is to encourage the members of AREF to adopt best investment practice wherever possible and is reviewed at least annually by AREF's Corporate Governance Committee.
AREF fund members must confirm their compliance with our Code of Practice each year. Effectively, this is our equivalent to the globally successful Stewardship Code. Our principles-based approach is based on three key elements: operational intergrity; transparency; accountability. We believe this takes managers of real estate funds beyond mere statements of intent, to a demonstrable commitment to the highest standards in corporate governance and transparency.
Current Code of Practice
Key Principles
Click on the headings below to read more about each of the key principles:
Operational Integrity
Managers are expected to provide clear transparent and unambiguous documentation about the governance and structure of AREF member funds. This includes:
- Fund structure, fund objectives and strategy, governance matters such as fund oversight by committee, details surrounding the appointment, obligations and termination of the manager, how and when the fund will end its life, liquidity provisions and investor protection policies such as confidentiality and disaster recovery.
- Managers should demonstrate integrity and ensure that investors will be treated fairly in all circumstances.
Accountability
Managers of AREF member funds have operational policies and procedures which ensure that they are accountable for their actions and demonstrate an alignment of interest between the manager and investors. This includes:
- The setting of performance objectives, fund benchmarks and performance calculations, internal investment committees including management structure and accountability, clarity over calculation and timeliness of distributions, transparency in reporting of fees and expenses, adequate procedures for provision of unit pricing and dealing in subscriptions and redemptions, collection and reporting of fund flows and other relevant data.
Transparency
Managers of AREF member funds are expected to act in the best interests of all investors and provide transparent and timely information to them:
- Reporting should be timely and accurate and including relevant up to date information and analysis.
- Managers should maintain an open dialogue with investors including communication over decision making processes, the use of independent third parties for valuations and secondary market transactions, the appropriate use of financial instruments including risk monitoring, and transparency over insurance and service charges.
- Appropriate policies should be in place that address potential risk and conflicts and these should be disclosed to investors where they may affect the integrity of the fund.
- The fund should demonstrate a proactive attitude towards improving ESG initiatives. In achieving best practice, annual reviews should be conducted and disseminated to investors.
Annual Fund Compliance
Self Certification Process
AREF fund members must confirm their compliance with our Code of Practice each year. This is done online, through our unique Self Certification Platform. Fund's answer a number of questions and supply evidence against each individual section of the Code.
Once this is submitted through to AREF, we give final approval and the Funds' level of compliance with the Code is displayed on a Self Certification Matrix each year and the Fund also receives our Quality Mark to use in their marketing.
You can access the Self Certification Platform by clicking here.
Quality Mark
Funds that complete their self certification and make this commitment can display our Quality Mark, with a new one awarded each year. This makes it easier for investors and their advisers to discern which funds have signed up and help them make better informed investment decisions.
You can read more about the Quality Mark by clicking here.
Self Certification Matrix
Furthermore, as AREF promotes ‘best practice’ wherever possible, we publish a matrix which clearly shows how all member funds are performing with regards to their level of compliance with the various elements of the Code of Practice. Given the heightened focus on governance amongst investors, we trust they will be reassured that AREF expects the highest level of governance from members of the association.
With investors in real estate funds increasingly looking at governance, the Matrix and Quality Mark make it easier for investors and their advisers to discern funds' commitment to good governance.
You can view historic self certification matrices by clicking here.
Audit/Review of Annual Fund Compliance
Each year approximiately 12 AREF funds are selected at random for an audit. This ensures managers are completing the Self Certification process correctly and are running the Fund within the spirit of the AREF Code of Practice.
The Reviewers, carrying out the audit, will be drawn from AREF's Corporate Governance Committee members. All Reviewers agree to a confidentiality clause (click here to view). Funds will be selected for review a maximum of once every three years.
AREF will retain oversight of the review process and communication with the selected Funds will be with AREF alone, except at the interview between the Reviewer and the Fund Member.
For more information, please view the Process document and watch the short film below:
Investors
If you are an investor, have concerns about the compliance with the Code of an AREF member fund in which you invest, and have not been able to reach a satisfactory resolution with the manager, please email AREF on [email protected].
Enquiries
If you would like to discuss anything regarding the Code of Practice, please email [email protected] and one of the AREF Team will get back to you.
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